2022 (2) TMI 836 - Tri - Insolvency and Bankruptcy

Tribunal Admits Insolvency Petition, Initiates Resolution Process

Easy Trip Planners Limited Versus Kriarj Entertainment Pvt. Ltd.

The Tribunal admitted the petition under Section 7 of the Insolvency and Bankruptcy Code, initiating Corporate Insolvency Resolution Process against the ... Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT:- Mere plain reading of the provision under section 7 of IBC shows that in order to initiate CIRP under Section 7 the applicant is required to establish that there is a financial debt and that a default has been committed in respect of that financial debt. That while dealing with an application under section 7 the Adjudicating Authority is not required to consider the question of dispute between the parties as long as the 'debt' and 'default' is established. Corporate Debtor contention of making T-Series a party has failed as no settlement agreement has been placed on record and even if for the sake of argument, if it is considered, still the same is not binding upon the Financial Creditor - the documents submitted by the Financial Creditor and the Corporate Debtor clearly substantiate the Financial Creditor's claim that the Corporate Debtor has defaulted on repayment of loan amount. After giving careful consideration to the entire matter, hearing the arguments of the parties and upon appreciation of the documents placed on record to substantiate the claim, this Tribunal admits this petition and initiates CIRP on the Corporate Debtor with immediate effect - the present application is complete in all respect and the applicant financial creditor is entitled to claim its outstanding financial debt from the corporate debtor and that there has been default in payment of the financial debt. Application admitted - moratorium declared. Issues Involved:1. Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016.2. Existence of a financial debt and default.3. Maintainability of the petition due to the Corporate Debtor's name being struck off from the Register of Companies.4. Alleged involvement of a third party (T-Series) in the repayment of the debt.5. Appointment of an Interim Resolution Professional (IRP) and declaration of moratorium.Issue-wise Detailed Analysis:1. Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016:The application was filed by M/s. Easy Trip Planners Limited to initiate CIRP against M/s. Kriarj Entertainment Pvt. Ltd. under Section 7 of the IBC, 2016 for an alleged default in settling an amount of Rs. 15,30,00,000/- paid to the Applicant. The Tribunal admitted the petition, initiating CIRP on the Corporate Debtor with immediate effect.2. Existence of a financial debt and default:The Tribunal noted that the Applicant had advanced a total amount of Rs. 15,30,00,000/- to the Corporate Debtor for the production of a Bollywood film, with the agreement stipulating a refund along with interest at 2% per month. The Corporate Debtor defaulted on repayment, and the Tribunal confirmed that the debt and default were established. The Tribunal emphasized that under Section 7, the Adjudicating Authority is not required to consider disputes between parties as long as the 'debt' and 'default' are established.3. Maintainability of the petition due to the Corporate Debtor's name being struck off from the Register of Companies:The Corporate Debtor argued that the petition was not maintainable as its name had been struck off from the Register of Companies. However, the Tribunal clarified that IBC proceedings can still be initiated against a Corporate Debtor whose name has been struck off, thus rejecting this contention.4. Alleged involvement of a third party (T-Series) in the repayment of the debt:The Corporate Debtor contended that the amount was payable by T-Series as per a settlement agreement dated 14.06.2018 and a tripartite agreement dated 18.06.2018. However, the Tribunal found that no documentary evidence was provided to support these claims. The Tribunal also noted that even if such an agreement existed, it would not be binding on the Financial Creditor. The Tribunal concluded that the Corporate Debtor's contention failed as no settlement agreement was placed on record.5. Appointment of an Interim Resolution Professional (IRP) and declaration of moratorium:The Tribunal appointed Ms. Maya Gupta as the Interim Resolution Professional (IRP) and declared a moratorium under Section 14 of the IBC. The moratorium prohibits the institution or continuation of suits against the Corporate Debtor, transferring or disposing of its assets, and recovering any property occupied by the Corporate Debtor. The IRP is directed to perform duties under Sections 15, 17, 18, 19, 20, and 21 of the IBC, and all personnel connected with the Corporate Debtor are legally obligated to assist the IRP.Conclusion:The Tribunal concluded that the present application was complete in all respects and the Financial Creditor was entitled to claim its outstanding financial debt from the Corporate Debtor. The Tribunal admitted the petition under Section 7 of the IBC, initiated CIRP, appointed an IRP, and declared a moratorium. The office was directed to communicate the order to all relevant parties and update the status of the Corporate Debtor on the Registrar of Companies' website.